The Positioning of Public Cloud Services – Part II

In today’s Public Cloud market, each large player displays their own unique strengths in the offerings. The competitions are fierce on price (with IaaS in particular) and on features of higher growth potentials to achieve better economies of scale. New services and features are being added rapidly in order to compete and differentiate more effectively.

Amazon Web Services(AWS) apparently has the early-entry advantage for IaaS offerings. They pioneered some of the industry concepts such as “pay by usage hours”, etc. Recent surveys indicated that AWS currently leads in market share at more than 50% among all sizes of businesses using Public Cloud. The key strengths of AWS are at least three-fold: the total cost advantage in IaaS by using commodity hardware with promises of unlimited capacity and compute power; the full range of Linux-based open-source solutions for Big Data; and the global geographical zoning coverage. Amazon S3 storage system, very practical for storing massive unstructured data, currently hosts trillions of objects and processes 1 million requests per sec. It offers extremely low cost at $0.03 per GB per month (or about $30 per TB per month), leading in industry. AWS’ packages of Linux-based solutions appeal to a broad market base which have been experimenting mixed IT solutions with newer technologies and open-source, especially for Big Data. Various Hadoop ecosystem tools for Big Data processing and analytics are wrapped inside AWS managed services such as Kinesis, Elastic MapReduce (EMR), etc. Customers only need to focus on tuning the number of cluster nodes needed for processing the data load (and the associated usage cost) instead of wasting time to twist Hadoop code which is often a huge resource challenge for open-source adopters. Another leading factor for customers to choose AWS is at its geographical coverage worldwide. Amazon claimed to have AWS coverage in 190 countries. Its zoning strategy not only offers great redundancy, but also allows customers to control geographic instances of their choice and let many believe that their data can reside in the region of their choice with needed Amazon support in place. However, with currently 30+ major AWS offerings and all kinds of unfamiliar terminologies, things can become quickly confusing to customers. Amazon may need to better organize their offerings and provide better education to the market.

Google has clearly positioned their cloud platform Google Web Services as the platform for developers. Google has significant advantages over developer areas as their software-driven cloud architecture is a direct extension of their internal developer platform and solutions from supporting the gigantic search service. Google’s AppEngine is a strong PaaS contender and adopted by a large share of small and medium companies on the Public Cloud market. Google runs data-driven business. Their developer solutions including MapReduce, BigQuery, etc., often become the most widely chosen ones in the industry. As other companies are still learning and implementing Google’s earlier solution such as MapReduce as the top analytic choice for Big Data, including Amazon AWS, Google has already come up with more innovative ones. For example, DataFlow has already replaced MapReduce and Big Query as a faster solution internally, but not fully disclosed to external yet. Google is also marketing the other advantages of its software-driven cloud, such as high uptime, virtual storage, zero startup time, consistent throughput, etc. The possibility of real-time collaborations on cloud appeals favorably to developers and many business users. Google’s Android developers can leverage the cloud platform directly for mobile applications, which will be a huge growth area for clouds. Although Google faces the dilemma of “the open-source openness” in competitions, its speed on innovations and the flexibility in their cloud architecture make them a formidable competitor in future cloud offerings, especially in application areas. In fact Google is pursuing aggressively on new cloud-based workplace software to compete more effectively in enterprise space as the enterprise adoption of Google’s cloud services has lagged behind those of Amazon and Microsoft.

Microsoft certainly has the capabilities to offer the broadest variety of services on cloud. Currently Microsoft is trying to convert its numerous software advantages from the desktop world to the cloud, but it needs new thinking as the cloud reality demands new dimensions for software than the isolated desktop world. For cloud adoptions, it can benefit from the existing broad customer base, especially among large enterprises. In fact Windows Azure adoption among large enterprises has been steadily growing. With both IaaS and PaaS from Windows Azure and SaaS offerings from Office365, Exchange, Dynamic CRM, etc., Microsoft definitely has the capacity to set up as “one-stop shop” for all enterprises and mobile customers’ needs on cloud, although it still yet to achieve that stage or clearly define its positioning. Its IaaS and PaaS are competing with almost lock-step pricing with Amazon, however the most appealing factor for Microsoft’s cloud offerings resides in its broad software spectrum. Many enterprise tools, including Active Directory, SQL Server, SharePoint, etc., and developer tools such as Visual Studio, are still popular among customers, but the problem is that not all features from the desktop versions can be easily transported to the cloud versions. Conversion itself can be a challenge for Microsoft and easily confuse customers. Even for an enterprise customer on total Microsoft technology stack, migrating existing critical business applications to truly cloud-ready is not an easy task today unless it only uses hosted options. Beyond the familiar, one brand-new feature, Azure ML released in July, is a great addition to Azure PaaS. This drag-and-drop analytic tool on cloud is welcomed instantly by developers and data scientists alike. In addition, Microsoft is also trying to open Windows Azure platform to all customer choices, including Linux-based VMs (HDInsight) and Android/iOS/Symbian/other tools for mobile developers. The results of these offerings are yet to be measured. Compared with competitors’ cloud offerings, Microsoft has the advantages of familiarity to customers, but cautions are needed on the long-term roadmap as familiarity can often become a deterrent in the face of disruptive innovations.

There are also other providers that are competing on the market shares of Public Cloud services, for example, Rackspace in IaaS, Salesforce in SaaS, Verizon (Terremark), AT&T, VMware, IBM, HP, etc. It is definitely a space that is only getting more crowded.

In Part III, we will discuss some of the possible positioning scenarios and winning strategies on Public Cloud services per TriStrategist’s views.